US Treasury secretary Mnuchin says the trade war is ‘on hold’, bringing cheers to nervous markets
- Introduction: America and China reach consensus on trade
- Breakthough means tariffs won’t be imposed
- Markets have rallied in Asia…Europe to follow suit
- Experts: This peace may not last
Although there’s relief that the US and China have stepped back from a trade war, analysts are also cautious.
Tai Hui, chief market strategist for Asia Pacific at JP Morgan, predicts further clashes between the two sides:
Historical precedents suggest the U.S. could re-engage with China on trade issues if it sees China dragging its feet on fulfilling its pledges. Moreover, the last three months have further exposed Washington’s concerns over China’s advancement in technology and its threat as a competitor, both commercially and strategically.
It’s like a back pain that never goes away. It was a shock in the first instance it happened, but then life goes on as the most acute symptoms are addressed. The good news is that markets should learn to live with it and consider its impact more rationally.”
“The fundamental differences on trade and other economic issues remain unresolved.”
The undeclared “trade war” between US and China has been put on hold according to US Treasury Secretary Mnuchin as the two superpowers agree on a economic truce.
This development puts the planned tariffs on hold while the two countries work on a plan to re-balance their trade relations and dampens the geopolitical risk.
Britain’s blue-chip share index of top shares is likely to smash through 7,800 points for the first time ever today.
City traders are predicting a rally in London, thanks to the new spirit of detente between the US and China over trade.
US and China stepping back from the brink of a trade war has lifted sentiment, boosting equity indices, putting the FTSE on track for a fresh record high.
Asian equities have bounced and Europe points to a higher start, as Trump’s administration halts plans to impose trade tariffs on China, whilst China promises to significantly increase its purchase of US farm exports and energy.